Delta 9 secures operating capital, prepares for expansion

Delta 9 has secured funding for its operations and expansion plans.Andrew Selsky / THE ASSOCIATED PRESS

Delta 9 took another big step toward the future after securing a definitive loan agreement with a major bank in Canada.

The Manitoba-based cannabis company is set to receive $12 million in financing, which will keep them fully funded for the next two years and allow them space not to have to raise money on their own to fund their operations.

The debt instrument is broken down into four separate loan segments, each allocated for a specific purpose.

A demand operating loan of $2 million will go toward day-to-day operations, a demand revolving loan of $4.5 million will help the company’s purchase of their current 80,000-sq. ft. production facility in Winnipeg, a non-revolving loan of $4.5 million to aid in the purchase of the land adjacent to their production facility and a non-revolving credit facility of $1 million to go to purchasing or leasing equipment required for the company’s operations.

“This agreement shows real confidence in our Company’s business operations, but also a shift in attitude toward our entire industry, as we approach the full legalization of recreational cannabis in October,” said Delta 9 CEO John Arbuthnot, adding that he thinks the loan agreement marks a shift in the thinking of chartered banks about the cannabis industry. “More importantly, this debt facility combined with our $23 million prospectus financing which closed last December makes us fully funded for the execution of our business plan in 2019”

“Our Company is aggressively expanding to increase our reach in Canada and abroad, although equity markets for cannabis issuers, in general, have pulled back from highs reached early in 2018,” Arbuthnot said. “In order to preserve shareholder value over the long-term, it was important to us to find a non-dilutive source of capital to help finance our growth”

Delta 9 is looking at global projects in places such as Germany and Latin America.

“This agreement shows real confidence in our Company’s business operations, but also a shift in attitude toward our entire industry, as we approach the full legalization of recreational cannabis in October,” Arbuthnot said. “More importantly, this debt facility combined with our $23 million prospectus financing which closed last December makes us fully funded for the execution of our business plan in 2019”

Delta 9 is not releasing the name of their lender, citing that a non-disclosure agreement is in effect until the signing of a definitive loan agreement. The closing of the definitive loan agreement is subject to final due diligence by the Bank.

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